This study investigates the dynamics of informal urban space creation and the agency of residents in shaping their communities in informal settlements, focusing on Lemdig, an informal settlement in Algeria. Contrary to the assumption that low economic capital results in disengagement and passivity, our research utilizes qualitative methods, such as interviews and field observations, to examine residents’ experiences. The main findings indicate that residents actively influence their neighborhoods and assert their rights through collective efforts, the emergence of new actors, and the contestation of power relations with public authorities. Furthermore, this research advocates for a shift in how we perceive and engage with informal settlements, emphasizing the need for a more adaptive approach to upgrading informal settlements that consider the existing economic and social dynamics.

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